HOUSE STATE AFFAIRS STANDING COMMITTEE February 13, 1993 8:00 a.m. MEMBERS PRESENT Representative Al Vezey, Chairman Representative Pete Kott, Vice Chairman Representative Harley Olberg Representative Gary Davis Representative Jerry Sanders (via teleconference) MEMBERS ABSENT Representative Bettye Davis Representative Fran Ulmer COMMITTEE CALENDAR HB 81: "An Act relating to the longevity bonus program." HELD IN COMMITTEE FOR FURTHER CONSIDERATION HB 36: "An Act relating to retirement incentive programs for the public employees' retirement system, the teachers' retirement system, and certain persons under the judicial retirement system; and providing for an effective date." HELD IN COMMITTEE FOR FURTHER CONSIDERATION HB 44: "An Act making a special appropriation to the principal of the permanent fund; and providing for an effective date." NOT HEARD HB 49: "An Act relating to facsimile absentee ballot application and facsimile absentee voting." NOT HEARD HB 47: "An Act relating to the delivery of the primary ballots to persons making application for them when, by operation of political party rule, two or more primary ballots must be provided to the public." NOT HEARD WITNESS REGISTER Nancy Usera, Commissioner Department of Administration P.O. Box 110200 Juneau, AK 99811-0200 465-2200 Position Statement: Supported HB 81 Paul Miller P.O. Box 384 Delta Junction, AK 99737 895-4493 Position Statement: Opposed HB 81 Gene Smart P.O. Box 6923 Nikiski, AK 99635 776-5678 Position Statement: Supported HB 36 Alice Oates P.O. Box 488 Tok, AK 99780 883-4929 Position Statement: Recommended HB 81 be amended Mellie Terwilleger P.O. Box 206 Tok, AK 99780 883-2531 Position Statement: Supported a 100 day session limit Marilyn Sterling 4400 Shoshoni Avenue Anchorage, AK 99516 345-1214 Position Statement: Supported continuation of the longevity bonus John J. Shaffer American Association of Retired People 303 Kimsham St. Sitka, AK 99835 747-8425 Position Statement: Supported reform of the longevity program Rose Palmquist P.O. Box 870294 Wasilla, AK 99687 376-2274 Position Statement: Opposed HB 81 Hugh Johnson HC 31 Box 5116 Wasilla, AK 99654 376-2603 Position Statement: Supported longevity program Jim Sterling 4400 Shoshoni Avenue Anchorage, AK 99516 345-1214 Position Statement: Opposed HB 36 Rose Feltz 1460 Grubstake Wasilla, AK 99654 376-5967 Position Statement: Supported SB 6 Gloria Maschmeyer 2234 Knoll Circle Anchorage, AK 99501 277-0787 Position Statement: Supported HB 81 Elmer Lindstrom, Special Assistant Department of Health and Social Services P.O. Box 110601 Juneau, AK 99811-0601 465-3030 Position Statement: Supported HB 81 PREVIOUS ACTION BILL: HB 81 SHORT TITLE: PHASE OUT LONGEVITY BONUS BILL VERSION: SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR TITLE: "An Act relating to the longevity bonus program." JRN-DATE JRN-PG ACTION 01/22/93 130 (H) READ THE FIRST TIME/REFERRAL(S) 01/22/93 130 (H) STATE AFFAIRS, JUDICIARY, FINANCE 01/22/93 130 (H) -2 FNS (ADM) 1/22/93 01/22/93 130 (H) GOVERNOR'S TRANSMITTAL LETTER 02/02/93 (H) STA AT 08:00 AM CAPITOL 102 02/02/93 (H) MINUTE(STA) 02/06/93 (H) STA AT 08:00 AM CAPITOL 102 02/13/93 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 36 SHORT TITLE: RETIREMENT INCENTIVE PROGRAM BILL VERSION: SPONSOR(S): REPRESENTATIVE(S) MACKIE,Hudson,Ulmer,B.Davis, Brice TITLE: "An Act relating to retirement incentive programs for the public employees' retirement system, the teachers' retirement system, and certain persons under the judicial retirement system; and providing for an effective date." JRN-DATE JRN-PG ACTION 01/08/93 33 (H) PREFILE RELEASED 01/11/93 33 (H) READ THE FIRST TIME/REFERRAL(S) 01/11/93 33 (H) STATE AFFAIRS, LABOR & COMMERCE, FINANCE 01/28/93 (H) STA AT 08:00 AM CAPITOL 102 01/28/93 (H) MINUTE(STA) 01/28/93 (H) MINUTE(STA) 01/29/93 182 (H) COSPONSOR(S): HUDSON- FIRST COSPONSOR 01/29/93 182 (H) COSPONSOR(S): B.DAVIS, BRICE 01/30/93 (H) STA AT 08:00 AM CAPITOL 102 01/30/93 (H) MINUTE(STA) 01/30/93 (H) MINUTE(STA) 02/02/93 (H) MINUTE(STA) 02/04/93 (H) STA AT 08:00 AM CAPITOL 102 02/06/93 (H) STA AT 08:00 AM CAPITOL 102 02/09/93 (H) STA AT 08:00 AM CAPITOL 102 02/09/93 (H) MINUTE(STA) 02/11/93 (H) STA AT 08:00 AM CAPITOL 102 02/13/93 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 44 SHORT TITLE: APPROP: TO PERMANENT FUND PRINCIPAL BILL VERSION: SPONSOR(S): REPRESENTATIVE(S) MARTIN,Olberg TITLE: "An Act making a special appropriation to the principal of the permanent fund; and providing for an effective date." JRN-DATE JRN-PG ACTION 01/11/93 35 (H) READ THE FIRST TIME/REFERRAL(S) 01/11/93 35 (H) STATE AFFAIRS, FINANCE 01/18/93 102 (H) COSPONSOR(S): OLBERG 01/26/93 (H) STA AT 08:00 AM CAPITOL 102 01/28/93 (H) STA AT 08:00 AM CAPITOL 102 01/28/93 (H) MINUTE(STA) 01/30/93 (H) STA AT 08:00 AM CAPITOL 102 01/30/93 (H) MINUTE(STA) 02/06/93 (H) STA AT 08:00 AM CAPITOL 102 02/13/93 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 49 SHORT TITLE: ABSENTEE BALLOTING BY FAX BILL VERSION: SPONSOR(S): REPRESENTATIVE(S) MARTIN,Brice TITLE: "An Act relating to facsimile absentee ballot application and facsimile absentee voting." JRN-DATE JRN-PG ACTION 01/13/93 52 (H) READ THE FIRST TIME/REFERRAL(S) 01/13/93 53 (H) STATE AFFAIRS, JUDICIARY, FINANCE 01/20/93 117 (H) COSPONSOR(S): BRICE 01/28/93 (H) STA AT 08:00 AM CAPITOL 102 01/28/93 (H) MINUTE(STA) 01/30/93 (H) STA AT 08:00 AM CAPITOL 102 01/30/93 (H) MINUTE(STA) 02/09/93 (H) STA AT 08:00 AM CAPITOL 102 02/11/93 (H) STA AT 08:00 AM CAPITOL 102 02/13/93 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 47 SHORT TITLE: ABSENTEE BALLOTS - PRIMARY ELECTIONS BILL VERSION: SPONSOR(S): REPRESENTATIVE(S) MARTIN TITLE: "An Act relating to the delivery of the primary ballots to persons making application for them when, by operation of political party rule, two or more primary ballots must be provided to the public." JRN-DATE JRN-PG ACTION 01/12/93 43 (H) READ THE FIRST TIME/REFERRAL(S) 01/12/93 43 (H) STATE AFFAIRS, JUDICIARY, FINANCE 01/28/93 (H) STA AT 08:00 AM CAPITOL 102 01/30/93 (H) STA AT 08:00 AM CAPITOL 102 01/30/93 (H) MINUTE(STA) 02/04/93 (H) STA AT 08:00 AM CAPITOL 102 02/06/93 (H) STA AT 08:00 AM CAPITOL 102 02/09/93 (H) STA AT 08:00 AM CAPITOL 102 02/13/93 (H) STA AT 08:00 AM CAPITOL 102 ACTION NARRATIVE TAPE 93-18, SIDE A Number 000 The eleventh meeting of the House State Affairs Committee was called to order at 8:03 a.m. on Saturday, February 13, 1993, by Chairman Vezey. He noted a quorum was present. HB 81: PHASE OUT LONGEVITY BONUS Number 000 CHAIRMAN AL VEZEY stated the committee was on teleconference with Fairbanks, Delta Junction, Anchorage, Glennallen, Kotzebue, Mat-Su, Kenai/Soldotna, Ketchikan, Sitka, Tok, and Valdez. He then read the title of HB 81 and invited Commissioner Nancy Usera to testify. NANCY USERA, COMMISSIONER, DEPARTMENT OF ADMINISTRATION, explained and discussed the "Longevity Bonus Program Alternative Funding Proposals" chart. "It costs one hundred million for each year we delay," she said. Number 111 REPRESENTATIVE PETE KOTT asked why the administration introduced HB 81 instead of supporting SB 6. Number 120 COMMISSIONER USERA explained the SB 6 annuity phase out. The participation was unrealistic, she believed. Number 226 REPRESENTATIVE HARLEY OLBERG thought the annuity was the same as a savings account. Number 231 COMMISSIONER USERA agreed and further explained annuity accounts and actuaries. Number 255 REPRESENTATIVE OLBERG stated an annuity savings program could be bought by anyone through an insurance company. Number 261 COMMISSIONER USERA agreed. Number 263 CHAIRMAN VEZEY discussed taxes with regard to the longevity bonus. Number 267 COMMISSIONER USERA discussed tax implications and liability. Number 277 CHAIRMAN VEZEY thanked Commissioner Usera and began taking public testimony. Number 287 PAUL MILLER testified via teleconference from Delta Junction in opposition to HB 81. HB 36: RETIREMENT INCENTIVE PROGRAM Number 343 GENE SMART testified via teleconference from Soldotna in support of HB 36. Number 401 ALICE OATES testified via teleconference from Tok. She recommended HB 81 be amended. She asked the legislature to look into medicaid. Number 427 MELLIE TERWILLEGER testified via teleconference from Tok. She discussed HB 81 and also mentioned her support of a 100 day session limit. Number 454 MARILYN STERLING testified via teleconference from Anchorage. She and her husband made their retirement plans counting on the longevity bonus for income. They desired to stay in Alaska and asked for the longevity bonus to continue. Number 471 JOHN J. SHAFFER testified via teleconference from Sitka, on behalf of the American Association of Retired People. He agreed the longevity bonus needed to be reformed. He favored the annuity program in SB 6, and explained the value of the longevity bonus for seniors. Number 510 MS. STERLING suggested the committee review a report regarding older Alaskan senior citizens' impact on the economy of Alaska. Number 539 ROSE PALMQUIST testified via teleconference from Mat-Su in opposition to HB 81. She supported SB 6. Number 604 HUGH JOHNSON testified via teleconference from Mat-Su. He discussed the contribution of older Alaskans. He favored the longevity bonus. Number 640 MS. PALMQUIST reiterated her support for SB 6. TAPE 93-18 SIDE B Number 010 MR. SMART discussed the money saved with the retirement incentive program and reiterated his support for HB 36. Number 065 JIM STERLING testified via teleconference from Anchorage in opposition to HB 36. He alleged people who were retired from the state returned and worked on contract for more money than they were originally paid before retiring. It is costing the state more money not less, he said, and discussed the health benefits. He also said those vested moved out of state. Number 108 COMMISSIONER USERA reassured all seniors currently receiving the longevity bonus would continue to receive the bonus for the rest of their lives. She discussed the history of the governor's annuity program. The program went on the ballot in 1986 and did not receive support. The program was on the legislature's desk for seven years and was not enacted. It was not a financially viable program and was very complex. The liability of the longevity program had continue to grow, she added. Number 159 ROSE FELTZ, a member of the MAT-SU SENIOR CITIZENS' ADVISORY BOARD, testified via teleconference from Mat-Su in support of SB 6. "I was born in Alaska and I am 57 years old now. When I turn 65 there will be a law suit if I am treated differently than other senior citizens who receive the bonus," she said. Number 191 GLORIA MASCHMEYER testified via teleconference from Anchorage. She requested clarification of the SB 6 annuity program versus the phase out plan. She did not understand why anyone would want to put their Permanent Fund monies into a state annuity program. Number 254 COMMISSIONER USERA supported HB 81 and said Senator Kerttula, the prime sponsor of SB 6, could clarify any questions on that bill. She believed SB 6 phased out the longevity program over a 15 year period with a formula based step down. In order to keep the check at $250, while the step down amount increased, the Permanent Fund investment would be at 100 percent involvement among seniors, she added. Number 314 REPRESENTATIVE GARY DAVIS stated SB 6 annuity was a volunteer program. Number 324 MS. MASCHMEYER spoke in support of HB 81. Number 348 COMMISSIONER USERA said the SB 6 annuity program was extremely complex and impractical. Number 359 MS. MASCHMEYER was interested in the longevity bonus and would retire in Alaska. "I would not personally deposit my Permanent Fund in a state annuity account because it is not refundable and would not be inherited by my family upon my death," she said. Number 378 CHAIRMAN VEZEY said the option to put permanent funds into a savings plan of choice may be best. Number 383 REPRESENTATIVE OLBERG agreed that when seniors turned 65 and were not eligible for a longevity check there would be lawsuits. Number 393 COMMISSIONER USERA explained legal concerns by clarifying there would not be an eligibility problem because HB 81 would pass a constitutional test. REPRESENTATIVE OLBERG pointed out ten years from now, when his mother reached the age of 75, he could move her here and she would receive a check. Number 416 COMMISSIONER USERA confirmed the immigration of seniors into Alaska had increased and they would receive checks. This was a dilemma of the program, she added. Number 478 MS. STERLING noted there were four bills on this topic: HB 81, SB 6, SB 58, and HB 77, each of which had its own weakness. She asked if the program could be based on need. Number 491 REPRESENTATIVE OLBERG discussed needs' based programs. Many people with needs would not utilize available programs because of pride, he said. MS. STERLING pointed out social security and medicaid did not have a stigma attached to them. Number 511 COMMISSIONER USERA discussed needs' based programs in the Department of Administration such as the Older Alaskans Commission and the Pioneer Home. She claimed there was a network of support for senior citizens and that assistance for senior citizens had expended. Number 539 ELMER LINDSTROM, SPECIAL ASSISTANT, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, testified in support of HB 81. He discussed old age assistance being counted as income and spoke of the fiscal note savings. Number 581 MR. JOHNSON, a retired economist, stated his concern with social security, which he felt was not the cushion that people expected. He believed the longevity bonus would not be any different. "Do not tie the program to terms of need," he added. ADJOURNMENT Number 627 CHAIRMAN VEZEY adjourned the meeting at 9:36 a.m.